There Are Five Primary Functions of Inventories

question 36

Multiple Choice

There are five primary functions of inventories. One of the following is incorrect. Which one?

• A) Safety stocks
• B) Seasonal inventories
• C) Cycle stocks
• D) Coupling
• E) Pipeline inventory

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Definitions:

Discount Period

A designated time frame during which a discount is applicable on a payment or transaction.

Adjusting Entry

A journal entry made at the end of an accounting period to record any unrecorded income or expenses for that period.

Interest Payable

A liability account showing the amount of interest expense that has accrued but not yet been paid to creditors.

Effective Interest Rate

The actual rate of interest earned or paid on an investment or loan, accounting for the effect of compounding.